With the market’s summertime nadir two weeks away, the number of homes actively listed for sale in San Francisco has dropped to 540, which is 3 percent fewer than at the same time last year, driven by a drop in listing activity along with an uptick in sales.
At the same time, the percentage of listings which have undergone at least one price reduction is holding at 19 percent, which is 1 percentage point higher than at the same time last year.
Inventory levels should continue to drop over the next couple of weeks but then jump after Labor Day. And yes, while there has been an uptick in sales, year-to-date sales and new contract activity remains down on a year-over-year basis.
And this site continues to make “consumer protection” articles a la Ralph Nader.
( I know I know, you only speak the unbiased truth.)
Well hold onto your hats because Cloudflare Inc. just filed paperwork for it’s IPO, so like, thousands of liquid millionaires are going to be created in the coming months —and the impact on our property market is gonna be unprecedented. There’s gonna be a thousand more instant millionaires walking around to open houses in the coming months, multiple buyers hovering around limited properties, out-bidding one another with a frenzy unseen since 1999, ready to pay TOP DOLLAR and ALL CASH for the few remaining luxury SFHs in The City!
From your keyboard to God’s ears, everyone on this site is cheering for that. But I don’t think Cloudflare alone will account for that probably 300 or so. You need to count the other recent and upcoming IPOs to get to thousands of millionaire buyers (Medallia, Fastly, what have you). Of course there are only 60 houses for sale over $2m so not sure a thousand buyers is needed to create a buying frenzy for them.
You would think so, but after Juul, Slack, Lyft and Uber so far the market is positively icy. Cloudflare is a blip compared to that. Uber has already lost a couple Cloudflares worth of market cap.
What feels icy about it?
Uber and Lyft are still in lockup
“This study empirically demonstrates the positive impact of initial public offerings (IPOs) on local housing prices in California from 1993 through 2017. In the spirit of the difference-in-difference approach, we test whether hedonic price indexes increase after IPO events more for the areas around IPO firm headquarters. We use the IPO events of public filing, issuing, and lockup expiration to distinguish changes in the shareholders’ expected wealth, assessed wealth, and immediately available wealth, respectively. HPIs increase more within 10 miles of IPO headquarters than in the surrounding area by 1.0% after filing and 0.8% after issuing but approximately zero after lock-up expiration.”
But other language in the study would support strong IPO effect in a locality such as SF. You cite only part of the clause and bolded a part. However, just above this is stated: “We find the baseline premium in growth rate for the treatment area defined by a 1- to 2-mile radius.”
Are we not to consider SF’s geographic constraints? 10 miles away lies Oakland, another market entirely.
And in the next paragraph they state this: “For example, when firms are younger than the first quartile, there is a 2.8% increase in house price levels around the issuing event,”
Should we not consider the relative youth of many of these companies?
You misinterpret your quoted sentence.
The “baseline” is the growth when no IPOs occur. The “treatment” is the growth post IPO. The terminology is derived from medical testing where you are testing the effect of a treatment vs baseline improvement in patient health with a placebo.
“Thus, we conduct a placebo test by falsifying event dates while maintaining the correct locations. We find the baseline premium in growth rate for the treatment area defined by a 1- to 2-mile radius. This baseline premium is comparable in magnitude to the estimated treatment effect in our main result. However, the baseline premium is significantly smaller (around 0.6%) for a 10-mile area. When we remove the baseline growth rate premium from our main result for a 10-mile area, the average treatment effect is 1.0% for filing and 0.8% for issuing, but approximately zero for lock-up expiration.”
They are saying that the baseline (placebo) and treatment (post-IPO) results were not significantly different for the 1 & 2 mile case. Only in the 10-mile case did they see the effect. And their result about the minimal effect post-lockup is unchanged by this.
“The true treatment effect is significantly larger than the baseline premium only for 3 miles or more around issue dates and for 10 miles around filed dates. The effect of lockup expiration is also generally larger than the baseline premium, but the additional increase in house price is not large. Thus, we can conclude that IPO filing and issuance affect the surrounding housing market of a 10-mile radius by 1% and 0.8%, respectively. However, IPO lockup expiration does not significantly impact the housing market in California.”
OK. It’s not a vernacular I am used to. But I’d say, again, that 10 miles does not seem particularly applicable to SF. Especially these days as traffic worsens seemingly daily.
Cloudflare has their HQ here, but it looks like most employees are in Austin. Click on name link to see their current SF HQ. 20K square feet @150 square ft per person, is 133 people.
I’m sure 40 of them will do very well. If half of them buy houses and half of those buy in SF, that’s ten. About 4500 properties are sold in SF each year.
And their lockup won’t end for another 9 months or so: they’ll be lucky if the recession hasn’t arrived by then.
Call it 40, then. Couple that with another 40 from this IPO, another from that IPO, another 40 from the other IPO and another from that IPO, and another 40 from the other one. What does that 200 do to a SF marketplace with 111 2M and up SFRs on the market currently? Nothing, you’d argue?
See, here’s the thing. You know better but you write the way you do on here. And the editor doesn’t jump in on you with an “actually” or a “as we said.” Comical stuff.
But it’s not 40 and 40. All 40 won’t buy houses as some of them already own one and some will want to do other things with the money like start a business. Then, all won’t buy in SF, some will buy in Marin, some in the east bay, some on the peninsula. So it’s 10 here, and 10 there and 10 somewhere else, and 10 at another. All at different times.
So the first 10 will purchase when there is one set of 111, and the next will purchase a different set of 111.
And the 111 includes 5 holding off selling until next year in anticipation, so instead of 116 now, it’s 111 this year, and next year it will be 121 and that’s all you need to have no effect at all.
And then we have a recession to contend with, so those 10 will buy but a different 10 won’t and now we’re further behind than we were before.
Are you really parsing my imaginary concept so far? it was only based off the relatively small number of Cloudfare employees in the first place.
hes being TIC by the way. it seems that others didnt get it
House Prices Are Under Pressure in the Bay Area (Clearly it’s only the NAR and realtors who speak the unbiased truth…)
That’s a Zillow report. They say “typical”? What does that mean? I guess they’re using San Francisco MSA? Because San Francisco proper looks nothing at all like that year over year for July, wrt SFRS, condo/TICS, and 2-4 units. Not per the MLS at any rate.
“San Francisco” itself is up 507 over 505 sales 7/2019 over 7/2018. That’s a push. But in every way 7/19 over 7/18 is up in price. Whether listing average, 1.562M over 1.451M, listing median 1.275M over 1.199M, selling avg 1.695M over 1.581M, selling median 1.435M over 1.36M, $psqft avg 1064 over 1051, or $psqft median 1027 over 982.
Not just Zillow but the Wall St Journal, quoting a realtor even:
““Prices have dropped in Silicon Valley and sellers just aren’t used to the concept that [prices] can go down,” said Ken DeLeon, founder of DeLeon Realty in Palo Alto, Calif. “There’s just this malaise buyers had of, ‘I feel like it’s gonna drop further.’””
And the Chronicle too:
“Peninsula Realtor Ken DeLeon noted that foreign buyers, especially from China, are still active in the $10 million-and-up range. However, their purchases of homes in the $2 million to $4 million range “has tapered off, almost to zero,” The imposition of more stringent capital controls has made it hard for most people to get money out of China, unless you’re “uber wealthy,” DeLeon said.”
Apples and oranges between the more Zillow data-based piece and this one. (Albeit they don’t state what Zillow used.) Regarding local values, the Journal piece was largely editorial, anecdotal, other than one year over year June Redfin statistic for San Jose As far as the realtor they quoted, yeah if I was based in Palo Alto like that guy I’d be saying something similar probably. However, again, SF and for that matter much of the Bay Area other than Santa Clara County is not behaving that way. Personally I think prices zoomed utterly out of control in Santa Clara and San Jose last year, and buyers have pulled back out of fatigue. But that’s just my take from afar, really.